UPDATE 1-Gasoline supplies still tight in some U.S. states after Colonial restart

Reuters Staff

3 Min Read

(Adds details on flow rates, repair of September spill)

NEW YORK, Nov 7 (Reuters) - Retail U.S. gasoline prices remained elevated in some states on Monday following the restart of Colonial Pipeline's main gasoline line early on Sunday after a fatal explosion last week.

Prices in Georgia, one of the most affected states, were flat overnight and up 8 cents from a week ago to average $2.24 a gallon, motorist advocacy group AAA said.

An outage in the line, which can carry 1.3 million barrels of gasoline daily from the U.S. Gulf Coast to the New York area, restricted supplies to millions of Americans in the Southeast and some in the Northeast. Markets in the Northeast were less affected as Europe rushed to make up for lost supplies.

Prices could remain elevated for several days as pipeline flows normalize after the nearly week-long outage, analysts said.

"Effectively, the process is going to take time because they have to figure out how to reschedule all the deliveries ... all of that requires a fair amount of logistical juggling," said Sandy Fielden, director of research, commodities and energy at Morningstar in Austin, Texas.

"The market reaction is going to be much more pronounced if you have something that goes wrong."

The U.S. Environmental Protection Agency has issued waivers allowing Colonial to mix different grades of gasoline once shipments resume. Governors of some Southeast states have issued executive orders to lift a federal government limitation on the hours a driver can transport gasoline to ensure adequate supply.

Colonial restarted the line early on Sunday after replacing the damaged pipeline section with a new segment as a permanent fix.

The explosion late last Monday killed one worker and injured five others when a trackhoe struck the line during repairs of a September gasoline spill, which was Colonial's biggest in nearly two decades.

Colonial had installed a bypass line to circumvent the damaged section of the gasoline line after the September spill. The company expected to remove the bypass line and restore the original line to service by mid-November.

As of Monday, the bypass line remained in place and there were no changes in the plan to restart the original line by mid-November, Colonial said in a statement to Reuters.

The line was operating at normal capacity, Colonial said.

U.S. gasoline futures jumped as much as 15 percent following the explosion but ended last week about 6 percent lower as Colonial said it would restart the line quicker than many had anticipated. On Monday, U.S. gasoline futures were down 1 percent, the weakest component in the energy complex.

The September spill caused a more than 12-day outage and most traders expected a longer shut down this time due to the blast and fatality.

But experts said unlike the last incident, the cause was known and there were fewer uncertainties, allowing Colonial to restart the line quickly. (Reporting by Devika Krishna Kumar in New York; Editing by Meredith Mazzilli)